Key event risk next week: New Home Sales on Tuesday, Durable Goods Orders on Wednesday & 4Q GDP on Thursday

Notes: The greenback looks poised here post the FOMC policy meeting, with the index making a key outside-day reversal off four-month lows to close the session well above the weekly high. The rally has now taken the index into the March opening range high which comes just shy of a resistance confluence at 10,595. It’s important to note that we have not yet invalidated the monthly opening range and as such, while our immediate bias was shifted to the topside, we’ll remain prudent while below this level.

Bottom line: whether this reversal will materialize into a more substantial rally is too early to tell- but for now, our immediate focus is weighted to the topside while above the March low. Look for a definitive break/close above channel resistance dating back to the 2014 high for further conviction on long-side exposure into subsequent resistance objectives.

Notes: A warning signal on Monday had us looking lower after bullion took out the monthly high at the 1.618% extension and reversed course to close the session below the Friday range. The move was accompanied by ongoing divergence in the daily RSI signature which further supported the decline. More significant, is the fact that the reversal has taken prices back below former trendline resistance dating back to the 2012 high.

Despite the decline into a fresh three-week low, gold has not yet offered a close below the March opening range and as such, we will remain prudent on short exposure above this threshold. Bottom line: we will favor selling rallies / breaks of support while below $1357 with a close below $1325 eyeing subsequent targets into more significant support at $1300. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

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